THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN ANCHOR: But will they dare to hold another rally?

We're about to take you inside Iran.

Could North Korea celebrate July 4th by firing an advance long- range missile toward Hawaii?

The U.S. military steps up its defenses.

Could it shoot down that missile?

And he barely knew his own father -- an emotional President Obama kicks off Father's Day weekend by appealing to young men to be responsible parents.

I'm Wolf Blitzer in CNN's command center for breaking news, politics and extraordinary reports from around the world.

You're in THE SITUATION ROOM.

A stunning setback for Iran's reformers today -- Iran's supreme leader dashing their hopes for a do-over of the disputed election.

Here are latest developments.

In a public sermon, the Ayatollah Ali Khamenei declared an absolute and definitive victory for President Mahmoud Ahmadinejad. He shrugged off allegations of vote rigging, criticized the massive protests and threatened a tougher crackdown. During his sermon, the crowd chanted "Death To America!." But right afterwards, after night fell in Iran, opponents climbed to their rooftops and shouted "Death to the Dictator!." And they're planning a huge rally tomorrow, in open defiance of the ayatollah.

CNN's Reza Sayah is one of few Western reporters allowed to remain in Tehran right now.

With the stage now set for a potential confrontation tomorrow, I asked Reza to take us inside Iran and give us a sense of the tension and the excitement that people there are clearly feeling.

(BEGIN VIDEOTAPE)

REZA SAYAH, CNN CORRESPONDENT: And I think the emotions, the feelings, have evolved. It's been up and down. I think earlier in the week, you did see some excitement. Before that, you saw a lot of tension with those brutal crackdowns on the part of riot police and members of the Basij.

And now, what I'm sensing, is some tension re-emerging. We spoke to some supporters of Mr. Moussavi. Every day we asked them, do you plan to attend another rally, do you plan to attend another demonstration. And they said, yes, tomorrow they are planning to attend the demonstrations.

But they were clearly tense. They heard the supreme leader's message today. He made it crystal clear that he doesn't want to see any more of these protests.

Keep in mind, this regime, over the past 30 years, has been very uncommunicative. They've played it very close to the vest. They don't like their conflicts within to be played out in the public. And that's what we've seen over the past week.

So he's made it clear that he doesn't want to see any more of these public protests. And the supporters of Mir Hossein Moussavi realize that this is an important day -- that they may be on the verge -- this regime may be on the verge of getting ready for a crackdown much tougher than we saw earlier this week -- Wolf.

BLITZER: Reza, what's the image of the president of the United States, Barack Obama?

You've had a chance, over these days, to speak with a lot of Iranians.

What are they saying about this U.S. president?

SAYAH: It depends which Iranian you speak with. Over the past few days, we've attended some protests of supporters of Mir Hossein Moussavi. And on several occasions, I've had people come up to me and said, we need the U.S. president, Barack Obama, to listen to us, to listen to our cries for help. We need better relations with the U.S. He's a very popular person among the reformers -- among supporters of Mir Hossein Moussavi.

But then you have the Iranians who showed up in mass today to listen to the Friday prayers and listen Ayatollah Khamenei's speech. And this was a speech during which, once again, you heard "Death To America!," "Death To America!."

And after that speech, we spoke to many people who were in attendance. And they blame much of the crisis -- much of the turmoil that we're seeing unfolding here in Tehran on America, on Washington and on President Barack Obama -- Wolf.

BLITZER: The opposition -- I asked the question, Reza, the opposition, the supporters of Mir Hossein Moussavi, would they like to see the president of the United States get more outspoken, if you will, on their behalf or -- or stay more on the sidelines?

SAYAH: Well, I think they do. But I think they're very realistic. And they don't expect him to do much more than he has done. But I think when it comes to the supporters of Mir Hossein Moussavi, they're curious to see what he does. He's the key at this point. It's his move.

You had the supreme leader come out and side with President Mahmoud Ahmadinejad. And now it's Mr. Moussavi's turn.

This is a big day tomorrow -- another rally scheduled. We've had one rally after another over the past week without permission from the government. That's unheard of in Iran. We have another one tomorrow. We spoke to members of the camp and they said they're trying to get a permit, which is something that they hadn't tried to do in the past few days. They've moved ahead with these rallies without permission.

But tomorrow, they said, they're going to try to get a permission. But we spoke to the interior ministry and they said flat out -- flat out, that we are not granting Mr. Moussavi a permission for tomorrow's rally.

BLITZER: And I want to be transparent with our viewers, Reza, in the United States and around the world.

You're still restricted into what you can do as a journalist covering this story, is that right?

SAYAH: Yes. No question about it. A couple of days ago, we were limited to one report a day. Earlier in the week, they told us we were limited to our office space -- our work space and we were banned from covering and broadcasting images of these rallies and these demonstrations. But it's very interesting. They told us we are allowed to attend Friday prayers today. We are allowed to hear what Ayatollah Khamenei had to say.

And we did. We did attend it. They welcomed us. Our cameras were there to see his speech.

And we're just taking it a day at a time. We don't know what's going to happen tomorrow -- what instructions are going to come down tomorrow from the government.

BLITZER: Reza Sayah. We want you to be very careful, our entire CNN team over there. We'll stay in touch. I know you're limited to filing only one report a day.

We appreciate your good work.

(END VIDEOTAPE)

BLITZER: President Obama has been cautious when speaking out on the Iran crisis. But today, he seemed to step it up just a little bit.

He spoke with Harry Smith of CBS News.

Listen to this.

(BEGIN VIDEO CLIP, COURTESY CBS NEWS)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm very concerned, based on some of the tenor of and tone of the statements that have been made, that -- that the government of Iran recognize that the world is watching. And how they approach and deal with people who are, through peaceful means, trying to be heard, will, I think, you know, send a pretty clear signal to the international community about -- about what Iran is and is not.

(END VIDEO CLIP)

BLITZER: For over an hour of today's sermon, the ayatollah focused on the election, the protests and the West.

Abbi Tatton is here.

She's been taking a very close look at his choice of words.

ABBI TATTON, CNN INTERNET REPORTER: We put all those words into this word cloud so we could have a look at the words that were most focused on by the supreme leader earlier on today.

And as you can see from this, it's not the incendiary language that jumps out at you. It's people, election -- over and over again, this was a defense of the election. The Ayatollah Ali Khamenei calling it a great example of the people's participation.

Another thing that you'll see from this world cloud -- Islamic establishment, something else that was defended over and over again, saying that the West attacks the establishment, the government, in effect, of Iran, and saying that this is a government that would never manipulate votes.

So buried within all this is that short but very strongly worded threat about the protesters, that they would face consequences. But a lot of this, Wolf, was a defense of what's happened in the last week.

BLITZER: Interesting. Now you've also been following online the reaction coming in from the supporters of the leading opposition leader, Mir Hossein Moussavi.

TATTON: There is a rally planned for tomorrow. It's something that's being passed around to everyone. It's happening at 4:00. Many people are spreading that online. But I've also spoken to iReporters -- people that shot this footage earlier on this week, who said they heard the supreme leader's message loud and clear earlier on today and they are very doubtful that they'll be heading back out.

CAFFERTY: U.S. relations with North Korea seem to get more tense with each passing day. Defense Secretary Robert Gates says the U.S. could defend itself if North Korea launches a missile toward Hawaii.

Gates says there are missile interceptors and radar equipment deployed and: "We are in a good position should it become necessary to protect American territory."

This follows a Japanese newspaper report that North Korea might fire its most advanced ballistic missile toward Hawaii sometime around the Fourth of July.

What a great idea.

Although the missile is not expected to reach U.S. territory, it would be a huge slap in the face to the United States and the international community by extension.

There's more. The U.S. is currently tracking a North Korean ship in the Pacific that is known to have carried nuclear proliferation materials in the past.

North Korea has been making waves ever since May, when it conducted that big nuclear test, fired off test rockets and threatened U.S. and South Korean warships -- or ships, rather -- near its waters. Also last month, U.S. satellite spotted vehicle activity in a North Korean ballistic missile facility.

The United Nations has since slapped new sanctions on the country, to which North Korea responded with threats of war and promises to expand its nuclear bomb-making program.

Meanwhile, a new Gallup poll out shows more Americans view North Korea as a direct threat to the United States' security than any other country in the survey, including Iran. President Obama says the country's nuclear program is a grave threat to the world.

So here's the question: If North Korea fires a missile toward Hawaii, is the time for talking to them over?

Go to CNN.com/caffertyfile and you can post a comment on my blog -- Wolf.

BLITZER: That question is so ominous, it's hard to even, you know, think rationally about that. You know, I don't know what this guy could be thinking.

CAFFERTY: What -- I mean, you know, how ominous is the idea that they might fire a ballistic missile in the direction of Hawaii?

BLITZER: Yes.

CAFFERTY: I mean what is -- what are...

BLITZER: Kim Jong Il.

CAFFERTY: Yes. Emphasis on Il.

BLITZER: Yes.

All right. Jack, thanks very much.

CAFFERTY: Yes.

BLITZER: Is the health care reform effort running into big trouble?

As concerns rise about the cost, a warning that the president needs to step up his direct involvement.

And he was the first federal judge charged with sexual crimes while in office. Now, the House of Representatives has just voted to impeach him. And the legal battle involving a man who says airport screeners searched him unconstitutionally. He says the proof in his iPhone.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There is a fresh push on Capitol Hill right now to rev up momentum for President Obama's plan to overhaul the nation's health care system. Democratic leaders say Mr. Obama himself needs to get front and center in this debate.

Joining us now, our senior White House correspondent, Ed Henry, who's been reporting on this story.

Is the president's health care plan in trouble right now -- Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Yes. "On the rocks," is the blunt assessment I got from one top Democratic adviser to the White House, who said there is really some trouble brewing here. And several other senior Democratic advisers to the White House are saying much the same. What they're saying is basically two big blows to the president this week -- these cost estimates from the Congressional Budget Office. First, Senator Kennedy's plan. The estimate is still an early estimate (INAUDIBLE) legislation and the White House keeps pointing out it keeps changing.

But the bottom line, estimate of a trillion dollars and yet it's still going to leave millions of people uninsured.

The second blow was the estimate of Senator Baucus' bill -- $1.6 trillion -- a price tag much higher. Now, he's going back to the drawing board.

The bottom line is the White House has acknowledged in private that these are -- there are some bumps in the road. But they're insisting the president can still turn this around. They point out accurately, it is very early in the process and they hope he can turn it around.

BLITZER: All right, so does the president have some plans right now to try to get this thing turned around?

HENRY: Absolutely. Part of what I'm hearing from Democrats outside the White House is they're telling White House officials they really need to get the president out there more. He's obviously still very popular. He needs a more direct role.

And they've been responding. Next Wednesday night in prime time, ABC News is going to be having this sort of town hall meeting on health care. They think the president will grab the megaphone there.

And I'm also hearing very quietly that top White House officials are considering a potential presidential news conference next Wednesday afternoon, before that prime time special -- again, try to get the president out there, try to get him to raise the profile of health care.

They still think it's early in the process and they could still win this one.

BLITZER: Ed, stand by a moment.

I want to bring in our Congressional correspondent, Brianna Keilar -- Brianna, what are the Democrats on the Hill -- the president's allies -- doing to help him right now?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, some major -- major Democratic players in the House, Wolf, the three chairmen of the committees in charge of health care put out a rough draft of their plan today.

Here it is -- 852 pages chock full of Democratic priorities. And actually, they boiled it down -- because it is quite a bit -- to one page, an info sheet -- a very user friendly info sheet.

And this is really their message -- the 12 ways that health care reform will help you and your family.

Among them, they say if you like your doctor and you like your plan, you'll be able to keep it. If you don't, you'll be able to choose from a government run-insurance plan or from other private insurance plans. And they say there won't be co-payments or deductibles for preventive care.

Their ultimate goal -- to cover 95 percent of Americans. And I have to tell you, Wolf, they didn't tackle the issue of how much it's going to cost and how they're going to pay for it. But what you really saw here was Democrats in the House trying to show momentum and that they're unified, because so much attention this week has been on the Senate, where two different committees are pursuing two different plans and they really stumbled out of the gate -- Wolf.

BLITZER: You know, there's so much controversy over this proposed government run-insurance company that would compete with the private insurance companies -- almost all the Republicans oppose it and oppose it very strongly.

Is there talk among the Democrats of a compromise right now?

KEILAR: Not on the House side, Wolf. They strongly defended the need for what they call this public option. They say President Obama wants it. And they pushed back on Republican claims that it's just a way for -- to get to an end point of a total government takeover of health insurance.

Here's Energy and Commerce chairman Henry Waxman on that.

(BEGIN VIDEO CLIP)

REP. HARRY WAXMAN (D-CA), CHAIRMAN, HOUSE COMMITTEE ON ENERGY & COMMERCE: I think there's a lot of misinformation about the idea of a public option. Some people think it's going to be government takeover of health care -- a single payer system. That's not what we intend. We want to give people a chance to choose.

(END VIDEO CLIP)

KEILAR: Now, Democrats also really slammed insurance companies, saying the only reason they don't want a public option is because they don't want to compete against it and because the public option might drive their prices down.

But as you mentioned, Wolf, Republicans are really unified against this government-run insurance plan. But it's not just Republicans. There are some moderate Democrats who really have concerns about it, as well, especially in the Senate -- Wolf.

BLITZER: Ed Henry is our White House correspondent -- Ed, the only compromise I've seen between these two sides is what some in the Senate -- some of the moderate Democrats are suggesting, these co-ops.

They wouldn't necessarily be formal, government run-insurance companies, but they would be co-ops. And the White House has taken the position let's talk about it.

HENRY: That's right. And they have had an open mind on it. But you're right, it shows that there's been very little movement on the Hill from either side, frankly, to try to compromise here.

That is why the White House is hopeful that, look, down the road, as this process moves forward, maybe there will be a compromise. It's still early.

But you're absolutely right, nobody seems to be moving toward each other. In fact, each side is digging in.

And another very important development this week, Senator Majority Leader Harry Reid once again threw out there the possibility that he was going to use some arcane budget rules -- basically what they call reconciliation, so he would only need 51 votes, a simple majority, instead of 60 votes, to pass something.

The Republicans will be furious if he uses that because it will mean that the Democrats are ramming this through the Congress -- Wolf.

BLITZER: Ed Henry and Brianna Keilar are going to be busy -- very busy, not only on this issue, but a lot of issues.

Guys, thanks very much.

He was detained by airport screeners and now a man is suing the federal government for unreasonable search. And he says he has the proof captured on his iPhone.

And it's a favorite guilty pleasure that could be carrying a dangerous bacteria -- cookie dough. Yes, cookie dough is being recalled.

(COMMERCIAL BREAK)

BLITZER: Don Lemon is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Don, what's going on?

DON LEMON, CNN ANCHOR: We have a whole lot going on, Wolf.

The secretary of State's right arm is on the mend. Hillary Clinton is resting at home after two hours of surgery to repair her broken elbow. Doctors at George Washington University Hospital expect her to make a full recovery. Clinton's chief of staff says decisions about the secretary's schedule will be announced later. Clinton broke the elbow Wednesday, when she fell at the State Department -- an unfortunate accident there.

The guard who was gunned down last week at the Holocaust Memorial Museum has been laid to rest. Family and friends paid their last respects to Stephen Johns at a Maryland church. Interior Secretary Ken Salazar was among hundreds of mourners. Eighty-eight-year-old white supremacist James Von Brunn faces a first degree murder charge in that shooting. The House has voted to impeach a U.S. district court judge in Texas. Samuel B. Kent has admitted he lied to investigators about sexual assault on two women who worked in his courthouse. He is serving a 33 month sentence and still drawing his paycheck. Now, Kent refuses to resign before next year. If the Senate convicts him, the judge will lose his job and also his pension.

The FDA and the Centers for Disease Control & Prevention are warning people not to eat raw Nestle Toll House refrigerated cookie dough. Nestle is recalling the product after reports of E. Coli illness in 28 states that may be related to its products. Now, the recall does not include ice cream that contains Toll House cookie dough. Nestle says E. Coli has not been found in any of its products. The company says it ordered the recall out of an abundance of caution.

And want to live in an architectural landmark?

I'd like to live in one. This Frank Lloyd Wright masterpiece just went on the market for $15 million, Wolf. It's a fixer upper that needs about $7 million in repairs. The 1924 Ennis House sits on a hill north of downtown L.A. It was damaged by the Northridge earthquake and torrential rains.

It looks like a nice piece of property to have.

BLITZER: Yes.

LEMON: I'd like to have it.

BLITZER: For $22 million...

LEMON: For $22...

BLITZER: ...then you could spend a couple million just decorating it.

LEMON: Have you ever...

BLITZER: What about that?

LEMON: Have you ever lived in a historical landmark? BLITZER: No. I've...

LEMON: An architectural landmark?

BLITZER: No.

LEMON: I did in Chicago...

BLITZER: Really?

LEMON: ...in a Mies van der Rohe building. You can't change anything. It's an act of Congress to try to get something done.

BLITZER: No. I'm just a simple guy. (LAUGHTER)

BLITZER: Normal house.

All right. Thanks, Don.

LEMON: Thanks, Wolf.

BLITZER: Threats and beatings in Tehran -- our Iran Desk is sifting through the many reports from ordinary Iranians, many of them very, very courageous. They're sending material out to us. The situation is getting more tense right now.

And members of Congress criticize the president for his cautious stance on Iran.

Listen to this from Republican Congressman Mike Pence.

(BEGIN VIDEO CLIP)

REP. MIKE PENCE (R), INDIANA: When Ronald Reagan went before the Brandenburg Gate, he did not say, "Mr. Gorbachev, that wall is none of our business."

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM.

Happening now, he wields ultimate power, but is Ayatollah Ali Khamenei in danger of losing his grip on Iran?

We'll draw back the curtain and look at the supreme leader's inner circle.

They may have the most at stake -- Iranian women at the forefront of the opposition.

We're going to hear how they're using the Internet to prod their country toward change.

And $80,000 a song -- that's what a jury says one woman should pay for illegal downloads.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Let's get back to our top story. Iran's supreme leader tells reformists they'll have to live with the election results and he warns of a new crackdown if they don't.

CNN's Isha Sesay has been sifting through all of these reports coming in from ordinary Iranians. They're making their way. Many of these ordinary Iranians, Isha, they're very courageous to get their material out.

What are we seeing?

ISHA SESAY, CNN INTERNATIONAL: Wolf, as you point out -- and we should stress, it is very courageous for any Iranian to be using something like the Internet at -- at this point.

We know that the authorities there in Iran have been clamping down to try and basically stop the flow of information.

But here on the Iran Desk, we have been working flat out on this Friday. The focus of our efforts to really try and get reaction to that speech given by Ayatollah Khamenei and to get a sense of what's playing out on the ground right now.

We just got an e-mail, Wolf, from inside Iran. This e-mail all the more important given these restrictions on use of things like the Internet and social networking sites.

We're not going to say who it's from. We don't want to put anyone in any kind of danger. But it is an individual that CNN has been in regular contact with.

Let's put up for our viewers some of what that e-mail says. They say, in part: "There is a quasi state of martial law in the capital city. We just passed through a Basij road check. Older and younger Basijis holding huge guns were checking out passing cars for potential troublemakers."

Wolf, let's explain for our viewers. The Basij are, of course, the voluntary militia who have been involved in clashes with protesters throughout the week.

What we see as we scour the social networking sites, like Twitter and -- and Facebook, is that there is growing tension in Iran right now -- Wolf.

BLITZER: And we're also, Isha, getting a new sense of the violence in Iran earlier in the week.

SESAY: Yes, absolutely.

That tension has been playing out throughout the week, as has the violence. We know seven people -- at least seven people -- lost their lives in clashes on Monday. We also, Wolf, have been hearing these reports of crackdowns at Tehran University and other universities.

We have shown those pictures here on CNN. And now we are hearing the voices of those caught up in the clashes. We got this first-hand account of what played out at Tehran University during one of these raids.

We want to share it with our viewers. It is compelling. It is dramatic. Let's put some of what they had to say. We found this in "The Wall Street Journal." The individual said: "I live in the dorms at Tehran University. I was asleep when Basij militiamen entered my room early Monday morning, demolished everything, and started beating us. A man with a long beard broke my notebook and said: 'It is destroyed, this book that you were using against Islam and Ahmadinejad.' They beat students more when they saw posters of Mousavi in their rooms" -- Wolf, a really dramatic account from someone who says they were involved in what played out at Tehran University.

Bottom line now is, what will happen on Saturday? That is the question. Will people turn out in the streets, in open defiance of the supreme leader? The Iran desk is on top of this story. Our viewers can count on us for the very latest.

BLITZER: We will get back to you, Isha. Thanks very much.

A confrontation brewing in Iran right now, maybe just hours away.

President Obama has been walking a tightrope when it comes to Iran all week, a delicate balancing act, to avoid provoking the regime.

Less hesitancy though, today, in Congress, much less hesitancy.

Let's turn to our White House correspondent, Dan Lothian.

Dan, the president is coming under pressure, increasing pressure, from some members of Congress to be more assertive.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right.

You know, there has been a push on this administration, the president in particular, to say more and do more, this coming from Iran, all the way, as you mentioned, up on Capitol Hill.

But this administration this week has sounded like a broken record, saying that they are not going to interfere in the Iranian elections.

LOTHIAN: A defiant and self-righteous rant that seemingly does little to rattle the White House.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: We're not going to be used as political foils and political footballs in a debate that's happening by Iranians in Iran.

LOTHIAN: But the administration's muted response, unwilling to condemn the elections and support the demonstrators, has not gone unnoticed on Capitol Hill.

REP. ERIC CANTOR (R-VA), HOUSE MINORITY WHIP: We are here because, when America hears the call for freedom, we ought to answer.

UNIDENTIFIED FEMALE: The resolution is agreed to.

LOTHIAN: A unanimous sentiment. In a 405-1 vote, House members passed a nonbinding resolution condemning the violence and supporting all Iranians, who, lawmakers say, embrace the values of freedom, human rights, civil liberties, and the rule of law.

Up next, the Senate -- a similar resolution has been introduced by the president's chief campaign rival.

SEN. JOHN MCCAIN (R), ARIZONA: It's unfortunate, in a way, that this resolution is required, since the administration does not want to -- quote -- "meddle."

LOTHIAN: But Iranian analyst Afshin Molavi says the president's decision to not meddle is the right strategy.

AFSHIN MOLAVI, FELLOW, NEW AMERICA FOUNDATION: He needs to be on the record as standing with the Iranian people. But that does not mean he should aggressively insert himself into the political debate in Iran or aggressively insert himself into the battle between the regime and protesters, because that could potentially backfire.

LOTHIAN: A delicate balance, he says, for an administration trying to wean Iran from its nuclear program.

(END VIDEOTAPE)

LOTHIAN: And, Wolf, again, in that interview with CBS News, the president saying that he was concerned with some of the tenor and the tone of the comments that were made today.

But, you know, the president has a bully pulpit, and he could have made much more significant comments. As an observer here at the White House, though, the sense that you get is that they are intentionally trying to carry out this message and saying that they don't feel any pressure at all -- Wolf.

BLITZER: Dan Lothian is at the White House. Thanks very much.

Let's discuss what's going on with our senior political analyst, Gloria Borger, and our chief national correspondent, John King, the anchor of CNN's "STATE OF THE UNION."

The pressure, John, on the president from Congress is getting a little bit more intense, but he is very disciplined.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: So far, he's being very disciplined and he's showing the trademark Obama caution. He's a cautious man, a measured man, likes to study and see and learn before he acts. Now, in the CBS interview Dan just mentioned, he did say he's concerned with some of the statements by supreme leader. CBS says there's more of what the president said about the protesters and the protests themselves in the interview tonight. So, we will see if the tone shifts at all.

You know the pressure on him. The pressure on him is, yes, Mr. President, we understand you don't want to be accused of meddling, but the United States has a special place in the world, and, when you see something like this happening, you have to take the risk.

They under -- everyone understands the risk. Ahmadinejad will say, "The evil of the United States is trying to meddle in our affairs."

But there are some -- and just some -- there are others who argue the other position quite forcefully and agree with the White House -- there are some who say the special position of the United States in the world means you must stand with those people.

BLITZER: Because the -- the pressure is certainly enormous. If you listen -- and I'm sure the -- the White House carefully listened to what the ayatollah said today, in all of the ranting going on and on and on -- it would be easy to respond. And this guy, as we say, is very cool.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: It would be very easy to respond.

And the ayatollah was blaming the United States for meddling, even when President Obama has been so cautious about not meddling. So, he's going to get blamed either way.

What you're not hearing from the president is any more talk about engaging Iran. We're not talking -- we're not hearing that engagement anymore, because you can't engage a government that you -- you don't know what the government is.

And, also, there's another reason the president has to stay out of this. Why should he meddle right now in -- in internal politics in that country? This is an internal political fight. If it turns violent -- and that's a big question -- we will see what happens tomorrow -- the tone will, I think, shift, as John is saying.

But, right now, it's an internal political dispute. I think he has to stand back...

(CROSSTALK)

BLITZER: Because, as you know, John, there are these resolutions now circulating in the House and the Senate, you know, expressing support for the dissidents, for the -- for the opposition.

And -- and listen to this rising star in the House among Republicans, Congressman Mike Pence.

(BEGIN VIDEO CLIP)

REP. MIKE PENCE (R), INDIANA: When Ronald Reagan went before the Brandenburg Gate, he didn't say, "Mr. Gorbachev, that wall is none of our business."

(END VIDEO CLIP)

BLITZER: All right, that's the kind of rhetoric that -- that they're hearing.

KING: And -- and, remember, the commander in chief, the president, is the one who has the authority to do anything. So, what comes out of Congress is symbolic, but it does affect the political environment.

And what Congressman Pence is voicing there is that moral- standing argument, that, even if it is risky, the president of the United States, any president, must stand up when you have these pro- democratic, pro-democracy demonstrations around the world.

And, Wolf, it's not just here. Around the world, the president, the spotlight is on him. The Israelis who were in town this week don't like this response. They taught it was timid and soft, as one of them said to me in a meeting. The French have been more bold in criticizing.

And, as we get deeper into the administration, people are saying, let's grade the foreign policy. He said dialogue with Iran would work. How's that going so far? He said dialogue with North Korea was the way to go. What's the grade there so far?

He went to Europe, was received as a big statesman, but did he get any troops on the ground in Afghanistan? No. So, around the world, there are some people beginning to say, he's been well- received. He's improved the U.S. standing. But, on the check box of actual progress on the specifics of policy, what has he gotten?

BORGER: And -- and the truth of matter is, we don't know whether dealing with Mousavi would be any better than dealing with Ahmadinejad.

So, I think, at this point, the White House is being cautious, analytical. They're -- it's fine for Congress to do what it -- it -- it did. You're not hearing any complaints out of the White House about that.

But this is the president. And, again, if it turns violent, I think you will see a shift in the president's tone, but not...

(CROSSTALK)

BLITZER: And we will watch very closely, because, in the hours to come, there's expected to be a huge demonstration. And the ayatollah said, no more demonstrations. We will see how that plays out.

Who's on "STATE OF THE UNION" on Sunday?

KING: We have a great group of senators to explore these issues.

One, Richard Lugar, the Republican, who's been a leading voice on foreign affairs in this town for 30 years or more, he will join us. And we will ask him to rate the president's response, and we will watch the continuing developments. We're also going to talk about the health care debate. And, again, there, Dianne Feinstein of California, one of the Democrats with us. And we will have Chuck Grassley. He's the ranking Republican on the Finance Committee, where the health care plan went off the tracks a bit this week because of the biggest issue: How do you pay for it?

BLITZER: And Senator Feinstein is also the chair of the Intelligence Committee.

KING: That's right.

BLITZER: So, you can use her for that as well -- 9:00 a.m. Sunday morning.

Guys, thanks very much.

An airline passenger takes on airport screeners. He says they searched him unconstitutionally, and he recorded the whole thing on his iPhone. Wait until you hear this.

And what if you were in a car crash, and then you got a bill from the police and fire department for their time? Could this happen in your town?

(COMMERCIAL BREAK)

BLITZER: A battle is brewing between the agency that oversees airport screeners and attorneys representing a man who says he was searched unconstitutionally. The man says the proof is on his iPhone.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, Wolf, the American Civil Liberties Union is suing the secretary of homeland security, saying that -- that -- over what it calls unlawful searches and detentions at airports. The potential evidence is a tape- recording of TSA screeners.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): This iPhone captured the conversation between a Transportation Security Administration agent and a passenger.

(BEGIN AUDIO CLIP) UNIDENTIFIED TRANSPORTATION SECURITY ADMINISTRATION OFFICER: I'm just trying to ask some questions to figure out what all this is about, so I can get you on your plane. But you want to play smart ass, and I'm not going to play your (EXPLETIVE DELETED) game.

(END AUDIO CLIP)

MESERVE: The agent was talking to Steve Bierfeldt. He works for The Campaign for Liberty, an outgrowth of the Ron Paul presidential campaign, which promotes constitutional rights. Bierfeldt was flying out of Saint Louis when screeners saw this cash box in his carry-on.

At the time, it contained about $4,700, proceeds from the sale of political items. Although there are no restrictions on carrying large sums of money on flights within the U.S., the TSA detained Bierfeldt, and, along with other law enforcement agencies, questioned him for almost half-an-hour, and appeared to threaten him with arrest, unaware the phone in Bierfeldt's pocket was capturing every word.

(BEGIN AUDIO CLIP)

UNIDENTIFIED TRANSPORTATION SECURITY ADMINISTRATION OFFICER: The question is, why do you have this money? That's the question. That's the major question.

STEVE BIERFELDT, DIRECTOR OF DEVELOPMENT, THE CAMPAIGN FOR LIBERTY: Yes, sir. And I'm asking if I'm legally required to answer that question.

UNIDENTIFIED TRANSPORTATION SECURITY ADMINISTRATION OFFICER: Answer that question first. Why do you have this money?

BIERFELDT: Swearing at me, cursing at me, threatening to handcuff me, take me to the DEA and the FBI, just the inconvenience, no, that's -- it's not within bounds at all.

MESERVE: The TSA says an agent has been disciplined for using inappropriate tone and language, but said in a statement, "A passenger who refuses to answer questions may be referred to appropriate authorities for further inquiry."

The ACLU says Bierfeldt did not refuse to answer questions, and his detention and questioning violated constitutional protections against unlawful search.

LARRY SCHWARTZTOL, ATTORNEY, AMERICAN CIVIL LIBERTIES UNION: TSA believes its passenger screening is an opportunity to engage in freewheeling law enforcement investigations that have no link to protecting flight safety.

(END VIDEOTAPE)

MESERVE: The ACLU and Bierfeldt believe incident is reflective of a much larger problem,. But this passenger happened to be carrying a pocket copy of the U.S. Constitution and the latest technology -- Wolf.

BLITZER: Thanks very much. Fascinating stuff.

It's bad enough being in a fender-bender, but imagine getting billed afterwards for the police and fire department's time. Local governments have been using a so-called crash tax to raise revenue. And your town could be next.

CNN's personal finance editor, Gerri Willis, explains.

(BEGIN VIDEOTAPE)

JAY MIDDLETON, BILLED FOR ACCIDENT: I felt like I was robbed. I felt like someone picked my pocket.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR (voice-over): Two years ago, Jay Middleton was rear-ended by his daughter Jillian, who was following him home in her car. But it's what happened after the fender-bender that still infuriates him.

JAY MIDDLETON: Six weeks later, I get a bill from an accident. I thought it was a joke.

WILLIS: But the local police department in Pennsylvania was serious. The Middletons got a bill in the mail for nearly $300, the fee, an accident tax conceived by a company that acts as a safety services billing department for police and fire departments. The tax targets out-of-town insured drivers.

JILLIAN MIDDLETON, BILLED FOR ACCIDENT: The police officer was only there for five minutes and to fill out one piece of paper. It was a little excessive, I thought.

WILLIS: Excessive, maybe, but it's definitely widespread. At least 25 states have municipalities with the so-called crash tax in place, according to the Property Insurance Association of America. Eight states have passed laws banning the fees, the latest, Florida, where state Senator Mike Bennett sponsored the legislation.

MIKE BENNETT, FLORIDA STATE SENATOR: We really found some kind of outrageous examples of people who were being charged what we ended up calling the crash tax for services we felt that their property taxes should already be paying for.

STEVEN WESTERMANN, CENTRAL JACKSON COUNTY FIRE PROTECTION CHIEF: In these hard economic times, for any fire department, any alternative funding or any other options that are available are being looked at.

JAY MIDDLETON: I mean, how the heck do they get these numbers?

WILLIS: Jay Middleton says the crash tax could be coming to a town near you.

JAY MIDDLETON: Even though your town has one of these ordinances and you may be exempt from it, the town next to you where you don't live, if they adopt one, you're going to pay.

WILLIS (on camera): Fortunately for the Middletons, they never had to pay their crash tax bill, because the state of Pennsylvania made accident taxes illegal. Other drivers aren't so lucky -- Wolf.

(END VIDEOTAPE)

BLITZER: Gerri, thanks very much.

President Obama obviously a very, very busy man, but he tells Hispanic leaders today he hasn't forgotten about immigration reform. With so much on his plate right now, can he pull off comprehensive immigration reform, the reform he's promised?

We're going to talk about it in our "Strategy Session."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: We also know that keeping this promise means upholding America's tradition as a nation of laws and a nation of immigrants. Those things aren't contradictory. They're complimentary.

That's why I'm committed to passing comprehensive immigration reform as president of the United States.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: All right, add another issue on the president's agenda right now.

Let's talk about it in our "Strategy Session" with Democratic strategist Hilary Rosen and Alex Castellanos, a Republican strategist, both CNN political contributors. He's got so much going on, and, today, he meets with Hispanic -- an Hispanic group at a prayer breakfast and says, "I have not forgotten my commitment for comprehensive immigration reform."

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: It was a big campaign promise, and there is a path to succeeding here. It's not likely to be this summer. It's not likely to be this congressional session.

The -- the difficulty will be, next year is an election year, and can you cobble together a coalition to get it done? But Americans want to see this happen. They supported him saying he would get it done when he campaigned. I think he's serious about it.

BLITZER: It was elusive last year. Even when you had Senator McCain and Senator Kennedy working with President Bush on it, they couldn't do it. You -- do you have any reason to believe this president can get it done?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: I think it's going to be awfully tough. It's the old song, everybody wants to go to heaven, but nobody wants to die.

Everybody would like to get the Hispanic vote, would like to do something on immigration reform. But it's such a hot-button issue, and it exposes divisions within both parties. So, I think, right now, you're going to see a lot of talk about it.

But the -- a busy agenda, I think, gives, frankly, both parties the opportunity to say, well, how about if we try it next year?

BLITZER: I'm not sure -- even sure you're going to see a lot of talk about it, because this clearly not one of his top priorities. He's got a lot of other big issues on his plate right now, including health care reform.

And there are some suggesting, even at this early stage, that his health care reform is on life support.

ROSEN: I just don't know where people get that.

I think the legislative process has begun, and it's a little messy. But, when you look at the -- at the big-picture needs, look, health care costs have doubled in the last eight years for Americans. We're paying more than 32 percent more out-of-pocket expenses.

BLITZER: But this Congressional Budget Office report...

ROSEN: This need is very great.

BLITZER: ... saying it's going to cost $1 trillion or maybe $2 trillion, and it would only bring in an extra 16 million people, and give them the health insurance they need. Another 30 million -- 30 million -- or so would still be without health insurance after 10 years of this.

ROSEN: Well, there's a lot of pushback over what these numbers cover and what they don't cover.

I think you will see, now that this legislative process has begun, the House and Senate is going to engage. The White House will engage once these bills get to conference. Health care is going to happen. The need is just too great.

CASTELLANOS: I'm not so sure.

And, again, I -- as a pro-business Republican, I have worked with the health care industry in this town for quite a while. I think the Democrats have fumbled here at the line of scrimmage. There isn't a health care problem in American. There's a health care cost problem. Americans are worried that it's going to cost too much.

And, so, I think Americans just don't understand how the plan to reduce costs that the Democrats are putting on the table is going to cost a trillion dollars more. And that's why it's not a health care program now. It's a deficit-expansion program.

BLITZER: Because a trillion dollars is one thing, but, if it doesn't get the job done, and there are still 30 millions who don't have health insurance after 10 years of this, that's going to convince a lot of members of the...

ROSEN: Well...

BLITZER: ... Democratic Party, maybe there's another way.

ROSEN: Well, again, there's two major problems with this system. One is affordability and access. And -- and then the other is access.

So, most Americans who have health care costs are worried that it's going to get too expensive for them or that their co-pays are too high. So, that's something that can be more readily addressed by reforming cost containments within the system.

How many additional people you cover, that's why they're so anxious for a public option here.

(CROSSTALK)

BLITZER: Because -- because if they're -- if you're going to spend all that money, you at least have got to get everybody on board and bring them all in.

But hold your fire.

ROSEN: And that's...

(CROSSTALK)

ROSEN: ... come up with a system to make that happen.

(CROSSTALK)

BLITZER: We will leave it there, guys. Thanks so much. Jack Cafferty will be back with your e-mail. If North Korea fires a missile toward Hawaii, is the time for talking over?

And a tongue-lashing for the U.S. and a warning to his own people -- CNN's Brian Todd will dissect the speech of Iran's supreme leader, the Ayatollah Ali Khamenei.

And what price music? The courts say tens of thousands of dollars if you download songs illegally.

(COMMERCIAL BREAK)

BLITZER: All right, let's check in with Jack for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, the question this hour: If North Korea fires a missile toward Hawaii, is the time for talking over?

A Japanese newspaper reporting that they may -- may -- fire a ballistic missile in the direction of Hawaii around July 4.

Alan in Georgia writes: "Perhaps we should demonstrate our military capabilities to North Korea by shooting their missile out of the sky, whether it comes near Hawaii or not. As this would occur over international waters, China and Russia can't say or do anything about it. And, secretly, I think they might applaud, as keeping North Korea in its place benefits them as well."

Aaron says: "No, the time for talking would not be automatically over. North Korea has one of the largest militaries in the world. Their closest ally is China. Any military action could cause World War III to break out. Diplomacy has got to go the extra mile on this issue, but the time would definitely be justified for some serious saber-rattling."

Tom in Philadelphia: "I'm a liberal pacifist, but I think, if the trajectory is toward Hawaii, then it needs to be shot down, and every power plant, bridge and broadcasting station in North Korea needs to be destroyed. We also would need a U.N.-imposed government to build a bridge to a democracy."

Terry writes: "Absolutely. My wife is Chinese. She was an officer in the Chinese army for 10 years. She is astounded that the United States and the West haven't figured out that the North Koreans lie about most everything just to get concessions from the West, and then pretty much do what they want. Her viewpoint, get out of Iraq now, quit talking to North Korea, and slap them down."

Al in Hawaii writes: "Jack, I'm from Hawaii. I don't worry about the backward technology of the North Koreans doing us any harm. What I do worry about is that we maintain our calm and respond to these childish provocations with dignified negotiation."

And Paul says: "I believe Japan tried that back in 1941. It didn't work out too well for them." If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there, among hundreds of others.

You know, at some point, the North Koreans have to understand that there -- there will be -- there will be a response to this stuff.

BLITZER: We can only hope, Jack. We can only hope.

CAFFERTY: Yes.

BLITZER: All right, to our viewers, you're in THE SITUATION ROOM.

Happening now, chilling words from Iran's supreme leader: The election is over. President Ahmadinejad won. And further protests will be met with extreme reaction.

That's what he said. Now there are new fears of a coming crackdown, perhaps in the coming hours.

And more on Jack's question involving North Korea -- if North Korea launches a missile at Hawaii, what weapons does the United States have to defend itself?

And how much are you paying to download music? This mother of four is being ordered to pay -- get this -- $80,000 per song